Sovcomflot Cites U.S. Sanctions as Profits Again Plummet in 2024

Russia’s energy shipping company Sovcomflot reported financial results on Friday, March 7, citing the continuing impact of Western sanctions on its operations and warning that the pressures on its operations were likely to increase this year. This came as Donald Trump posted on social media that he was “strongly considering” additional sanctions on Russia to push it to the negotiating table with Ukraine. 

Sovcomflot told investors that Western sanctions have continued to erode its profits. The press release said, “The company's operations were subject to the influence of geopolitical factors and illegally imposed sanctions by unfriendly countries. The company continues to work systematically to minimize the negative impact of sanctions restrictions on its activities, consistently adhering to high standards of maritime safety and the quality of maritime operations.”

Among the factors cited was that some vessels had to be idled which the company said created “operational difficulties.” Operating costs for the year were up approximately 13 percent. This comes even after Sovcomflot downsized operations previously selling tankers and transferred vessels to companies outside the sanctions.

The result was that 2024 net profits were down by over half (55 percent) to $424 million. Revenues were down by 20 percent ($1.87 billion) as the company has also had to deal with the price cap imposed on Russian oil by the G7.

“New large-scale sanctions by the U.S. Treasury Department, introduced after the reporting date, became an additional limiting factor in the company's operations,” wrote Sovcomflot. It was referencing the January 10 announcement by the Biden administration. Before leaving office, Joe Biden imposed the largest sanction effort to date which included a new listing of Sovcomflot. The Treasury identified as blocked property 69 vessels, including 54 oil and product tankers and four liquefied natural gas (LNG) tankers, owned by Sovcomflot.

Donald Trump is now threatening to further increase the pressure on Russia writing on social media today that Russia is “’pounding’ Ukraine on the battlefield” causing him to “seriously consider” large-scale banking sanctions, other sanctions, and tariffs. He said if enacted the sanctions would be in place until a cease fire had been achieved and a final agreement on peace is reached.

Russia is reportedly anxious to loosen the sanctions which have placed an increasing hold on its economy. Energy products are one of the primary sources of revenue for Russia.